Author: SEN

The retail industry is in disarray, reeling from the blows of e-commerce, changes in tastes, expectations and income distribution. Malls and department stores are closing, the experience at surviving venues is often depressing and frustrating, and even worse, for many brands the web is not making up for lost sales.

How can we modernize our surviving stores, particularly profitable flagships? Since we live in what seems like constant technological change, it might seem only logical to apply some of that technology in our stores, for instance:

Virtual mannequins: as the customer picks up items, they are modeled on a display.

Augmented reality: the customer can see more info about the products she’s browsing on her phone.

NFC (Near Field Communication): The customer can tap her phone to view more product info and purchase the item.

Virtual reality: the customer can see items as they would look on her.

The problem is that all this technology misses the biggest change brought by the web:

1. Customers are taking their purchase decisions before even entering a store,

2. thanks to info from other consumers;

3. and then finish their purchase online, from the comfort of their home or office.

In other words no matter how novel the technology, our brand remains out of the loop. While this change in customer behavior does not yet apply to 100% of all customer segments, it is inexorably growing and cannot be stopped, and is changing not only how customers shop but also what they shop for.

The solution.

Should we throw in the towel and close all brick and mortar stores? If we continue along the current path the decision might be taken off our hands with dwindling sales and an expensive channel, so change is clearly necessary.

To have any impact our projects need to help us participate when customers take their decision, which is why it’s more useful to think of web projects rather than digital or technological projects or online and physical stores: a web of consumers who happen to be connected via certain technologies, in which we need to participate. Technology is necessary but insufficient by itself.

To understand the role physical stores can play, we need to integrate them into our customer’s quest and establish the specific value they can deliver.

a. We need to accept that our customer’s quest starts online, not at the store: it’s a question of convenience and expectations; to integrate our stores we need to establish specific answers they can still provide more effectively, such as sizing, accurate colours, combinations, textures; and, critically, when to provide this connection.

b. Instead of depending on dwindling local traffic, we need to visualize the much larger general online and offline traffic and give the customer new reasons to search or browse at the store: is everyone who is looking for our product finding us? Is everyone with a goal in mind for which our product is relevant finding us? For instance if our product responds to a specific quest (“I need new shoes”) and we know the customer can only visit during her lunch hour, we can make it easier by pointing out nearby food venues, the time to get to and from, the health advantages of walking after lunch by browsing at out store, and make the quest more productive by narrowing down the styles the customer might be interested in, matched to the styles and sizes available at the store.

c. Only once we are participating in our customer’s purchase decision and integrated the store into our customer’s quest does it make sense to make search at stores themselves easier and more productive. We will then be in a position to evaluate the technologies we mentioned at the beginning: do they contribute any meaningful value to our customer and to us, or are they merely a superfluous tech veneer? Do they let us understand what our customer is looking for? Do they take advantage of our customer’s willingness to contribute to the experience of other customers?

Takeaway.

There’s life yet in brick and mortar stores, but they will need to be rethought and repurposed, within the context of our customer’s larger quest and changing expectations. Throwing more technology at them does not address the main effects of the web on our business, makes the channel more expensive, and takes away resources where they are most needed.

With the ongoing worldwide recession many companies have put their hopes in emerging markets but for some the results have not lived up to their expectations, are taking much longer than thought or seem imperilled. The view from the web can help us put things in perspective and find specific opportunities for the right product mix and distribution channels.

Will China’s consumption take off? Will Brazil shrug off its recession? How can we grow more in Mexico? These are pressing matters for companies that have invested in emerging countries and now depend on them for their results. Seen from the perspective of the connected consumer we can see several opportunities:

What’s our customer’s experience as a consumer?

Closed, State led, corporatist economies left behind consumers, who made do with what was available locally, whether it was good or bad. The moment the economy opens and / or consumers are exposed to other possibilities thanks to the web, they leave old, stale brands behind to embrace what’s better or simply different.

The opportunity for multinational brands is to earn customers’ trust by offering choices which are clearly better than what they are used to, which represent the state of the art they can aspire to, or the best at their budget. This is a serious advantage when the competition is used to being a monopoly that treats its customers as barely tolerated pests.

[boxright]In some cases consumers would prefer national brands for patriotic reasons, in others anything foreign is automatically considered better, and brands will need to navigate these cultural peculiarities with care. For instance while many Mexicans would prefer to buy a national product they also traditionally thought of “made in the US” as synonymous with “better”, not because US products were the very best but because national products were so very bad; with the opening of the economy in the 1990s Mexican consumers have learned that the very best might come from other countries and that there are also bad US products, while many national brands were bought or disappeared altogether. The opportunity lies in earning our customer’s trust, and while some segments will buy national or foreign products regardless of their actual quality, the vast majority appreciates what’s done well.[/boxright]

The risk for multinationals is to repeat the same patterns as the local competition and become part of the oligopoly. We might be the biggest ice cream producer or the biggest eyeglasses manufacturer in the country, with healthy economies of scale and stupendous control of our supply chain, but it doesn’t mean our consumer appreciates o even understands our product – which means an opening for other brands.

How can the web help?

We can draw up a comparison with our competitors along our customer’s journey in terms of satisfying her needs, beginning with the basics of safety, hygiene, identity, and establish which specific value drivers our brand can own.

We need to take stock of our customer’s online journey, how it is exposing her to new products, prices and other consumers’ experience, as her purchase decision is increasingly being taken before she even steps into our traditional channels. We need to establish how much traditional marketing and distribution channels contribute to the sales funnel and trim them accordingly.

We need to use the web to be part of our customer’s conversation.

What’s our customer’s probable evolution as a consumer?

All economies have undergone an evolution in terms of consumption, and we can apply this experience to new markets. Customers have gone from conspicuous consumption (Bling! Cheap clothes!) to utilitarianism (Why do I have so many pants?), from conformity with what’s available locally to higher expectations (Customized fit, lower prices, durability, worker’s conditions), from mere transactions to participation (I would buy these pants again if they were available in grey).

The opportunity is to segment our customers according to their expectations, depending on this experience with consumption, their disposable income and aspirations, and adapt our value for each of these segments. A good example is how Audi and other car manufacturers have adapted their models to have more rear seat space in China, but there are many more opportunities beyond luxury.

We can then anticipate our customer’s probable evolution to adapt when some segments outgrow their original expectations, others are saturated or suffer external shocks (such as China’s fight on corruption and its effects on luxury goods used as gifts).

How can the web help?

We now have a medium through which our customers can tell us directly what they are looking for, what they are and are not finding, how much they are prepared to pay for it. This is an invaluable tool for our segmentation and product mix as we can take the guessing out of the equation.

The web can also help us deliver much of this value, from recommendations based on up to date profiles, previous purchases and what others are buying, to group purchases, to the pre purchase of special runs.

Analyzing a a polished brand like Sony from the perspective of the connected consumer can help us understand its predicament and any possible solutions, as well as our own.

What makes a beautiful sound? An experienced player who can go beyond mere technique, with a good instrument, in an acoustically ideal place… Heard by someone utterly bored by the score?

The question is rather: what makes a beautiful sound, to whom? In the old, monolithic world the virtuoso should be appreciated by the cognoscenti. Anyone not able to appreciate not just the music but the hard work behind it was simply an ignoramus. And while ignorance is still not a virtue, and should not be fawned over like most mass media do, we all have the right to appreciate quality differently. Someone who doesn’t try to appreciate something is a fool; someone who tries but doesn’t find it to his liking is within his rights.

If you think everyone tries to appreciate quality here are some counterexamples: is wine foreign, “frenchie”, not something real men drink, even if it happens to taste good? Is it something that implies sophistication, which you should pour with care and ponder, even if it tastes dreadful? Or is it something you can discover to make up your own mind?

What makes a good TV? A good stereo? In the old world engineering prowess and the opinion of experts counted, never that of the consumer. And this was all the more important in a world filled with substandard products, with shysters ready to gouge innocent consumers with over priced, unreliable, toxic junk.

But then the world changed. Consumers didn’t only have the opinion of sales reps and specialized magazines, they had each other. And lo and behold, soon they could know more about the product than either the hapless store clerk or the so called expert. The topics went far beyond what even the most seasoned technician could know, for they were about what mattered to consumers, like the colour of the device under different lighting: the experts didn’t know or simply didn’t care, for an expert has a social standing among his fellow experts and cares about gigahertz, surely not about how it looks in grandma’s living room.

Our consumer might still not be a technical expert, in fact he might not know exactly what’s best for him, but he has discovered many more aspects that do matter to him, and he’s hearing about them from the horse’s mouth: other consumers just like him; and it is in this world of new expectations that companies need to compete today.

As you can expect, it’s not a pretty picture, with the vast majority of companies stuck with the tired marketing methods of the old monolithic world: Customers are asking for reliability, durability, whether a product’s colour is more yellow grey than blue grey, all companies can offer is “New!”, “Sale!” and technical details such as megapixels and gigahertz which the customer doesn’t fully understand.

The other side of the coin is that this represents a unique opportunity for companies to escape competition on price alone, particularly when facing lower cost competitors.

Old model Walkman serves as an example of Sony’s predicament: Nice sound, beautiful design; but you can’t transfer any music to the device if your computer doesn’t conform to narrow specifications.

We can try to understand the predicament for Sony and everyone else from this perspective. What made a Sony Walkman an icon but a Sony MP3 player a sales fail? What makes a Sony mobile phone an also ran?

There are other aspects such as more fierce competition, but part of the problem is that Sony has had to compete in broader experiences, and not just in products; it’s not as if the company was blind to this, and in fact took steps to incorporate content and its distribution through its purchase of movie and record companies… Only to find that the competition offered consumers the chance to download music “for free”: No piracy, no iPod boom, but by itself that doesn’t explain all of Sony’s MP3 player problems: customers who actually bought music had a terrible experience transferring it to the players because of the clunky interface, clearly the company couldn’t extend its amazing industrial design to its equivalent in software; and at the time Sony needed to go beyond this, to encourage and facilitate music discovery and purchases, which Apple eventually managed to do with iTunes.

The connected consumer has made the experiences Sony competes in even broader and deeper; it is notorious that customer’s expectations have diverged wildly from the brand’s response. What makes Sony a particularly interesting case is that the company keeps producing great products, which its customers aren’t able to discover or use fully.

The case of the accidental Sony earphones.

Take the case of a consumer who grew up with audio CDs and is suddenly faced with the dreadful prospect of worse sounding music through iPods and their included earphones: he starts looking for alternatives, and in the myriad brands stumbles upon a Sony product, which with the included earphones sounds much better. Later our consumer wants even nicer sound, and starts looking to upgrade his earphones, or even to get into headphones. He has specific questions such as “what would be a definite improvement?”, “what’s a reasonable price?”, and not being an expert is missing important variables such as “not all MP3 players can drive all headphones”. Sony’s response? New! Big bass!

But our consumer is stubborn and carries on with his investigation, during which he stumbles (seeing a pattern?) upon Sony earphones (say the XBA-4), and crucially upon other people’s experience with them. They seem interesting, but are much more expensive than what he is willing to pay, and has the nagging impression that Sony charges more just because of its brand caché. He archives this model in his head and starts to decide between a Yamaha and an Audio-Technica in his price range.

As he prepares to purchase one of these, he decides to do some last minute, quick side research: those XBA-4 wouldn’t be available locally, would they? Surprise surprise (for his local retailers usually have old and overpriced models), they are… At half price… At a stodgy department store whose web site barely works. What to do? Go with the safe models, buy from reputable online sellers, or take the risk that he’s actually buying a blender through the clunky seller, or even that his credit card details are stolen?

Our consumer takes the plunge. The earphones arrive and they sound amazing, so much so that music becomes once again a pleasure to listen to, he starts buying more music and eventually buys another MP3 player from Sony. Much to his horror he also discovers that these same earphones sound merely “ok” or dreadful when connected to his phone or his stereo, in other words even if the earphones are good the overall experience might still have been bad.

Here are some conclusions we can draw from this example, which apply to everyone:

Our product might have cutting edge industrial design and technology, but our customer’s experience around it, from when he looks for it, to when he buys it and uses it might be horrible, fraught with doubt and dangers.

Our customer has many questions which traditional marketing and our in store staff cannot answer; we could step up our staff training programs to improve technical proficiency but they would remain out of sync with our customer, and in any case his experience begins before he even sets foot in a store: by the time he gets there his mind will already be made up. Answering through the medium our customer is using, the web, would mean sales and a competitive advantage.

Our customer’s access to other consumers’ experience is opening their eyes; these are not “pundits” but regular consumers whose shared experience points the way to the important stuff as well as the myriad minutiae which make up an experience, and may not be important to everyone but are bound to be important to someone – perhaps to our customer. You can now see why those poor companies that put a blogger or Facebook jockey in charge of their social media projects have fared so disastrously.

The one size fits all approach from old marketing isn’t going to cut it when we need to respond to our thousands of customers individually. This doesn’t mean that we need to be everything to everyone, we need to establish an online brand persona through our customer’s self service experience.

Sony still needs to master research and development, industrial design, manufacturing and distribution: these are necessary but no longer sufficient. Their customer’s experience is now much wider and growing and they cannot expect technical excellence by itself to win customers over. While this may sound like a daunting task, the flip side is that it represents an opportunity for Sony to attract customers on the merits not just of its products but of the overall experience around them, something lower cost competitors will be unable to do.

The first step for Sony and the rest of us is a change in mentality: our customer is out there, already looking for our product; is he discovering the best according to his budget? Does he know where to begin? How to grow? How can we help?

The second step is to establish how we can cultivate this knowledge, at all touch points and then among our different internal departments, to then be part of our customer’s conversation on the web.

Summary: Business Analytics represents a set of tools which has evolved from Data Warehousing and Business Intelligence to Big Data, with some proposing Analytics 3.0 as the next big thing. Understanding its evolution from the perspective of the customer centric web can help us see its real value and limitations, and where we should be investing.

How can we control our business better? How can we plan for it, particularly when it’s a large enterprise with many products and thousands of customers? This question is behind the evolution not just of Business Analytics but also of many advances in IT; we can summarize its development in the following table.

Stuck at reporting, seeing past trends, not actual analysis. Expensive and difficult to use for small and medium sized businesses.

An end in itself? Correlations, not causality.

Follows data, not actual customers.

Analytics 1.0 had to innovate to gather all the information from operations, with the help from mainframes and later PCs; going from paper to computers meant a huge advantage in reducing costs, improving efficiency and controlling companies; as Davenport recalls, the most important task was always asking the right questions, to establish which information we needed to be gathering and analyzing, since these were such arduous, time and resource consuming tasks.

Most large companies use these tools in some way, although Business Intelligence has really mostly meant reporting about past operations, which is very useful but a long way from actual predictions. This sort of data gathering, reporting and analysis is still beyond the means of most small and medium sized businesses.

Analytics 2.0 means Big Data: suddenly we have tons of information available, and not just from inside the company; we could have the information for weather patterns, pay days and shopper visits to our stores; and we have the means to gather and process all that information, going from single local servers to many on the cloud, with innovations like in memory processing. Some companies such as Google, UPS and the port of Hamburg have thrived by using Big Data

Analytics 2.1, which Davenport sees as 3.0, is about the use of Big Data and the change it requires from companies to include useful information into their products. It’s useful as it completes the information loop, but it’s more of a 2.1 change because we are still talking about what companies do with all this information with respect to their internal operations and in some select cases about their products, which can result in a huge competitive advantage like for Google and Amazon, and does require changes in the organization; but there is a bigger and altogether different phenomenon going on, and that is how information access is changing our own customers.

On the web our customers are discovering many more aspects related to our products, and they are finding about them from other consumers. In many instances the purchase decision is taking place without any intervention from brands or retailers: our customers find which products best serve their needs among themselves and only contact us at the moment of purchase. Their experience is taking a whole new life after the sale, as they exchange impressions and experiences, which affect our future sales.

In the “old” 1.0, 2.0, 2.1 mentality we can track customers just like we can track our products and operations, with tons of information and processing power, to then seek to improve the efficiency of our transactions; and this is very useful and profitable, but it doesn’t deal with our customers’ new expectations. And those expectations aren’t only about our products but also about ourselves.

A useful real life example example is the poor girl who found herself looking for certain products which taken together denoted an upcoming baby: the data collected allowed Target to send her pregnancy related coupons, which had an adverse effect on her as (a) it angered her parents, which she hadn’t informed, (b) probably made her feel uneasy about being spied on, and (c) probably put her (and others who read the story) off shopping at Target: great use of statistics, complete marketing fail.

What makes the failure even worse is that our customer is more than willing to tell us what she’s looking for, if we only know how to listen and help her find what’s best for her, which goes way beyond price cuts, coupons and promotions; in fact she’s more than willing to help our other customers find what’s best for them. Making customers feel like they’re spied on and used is exactly the opposite of what’s required, which is to earn their trust, make them feel safe and valued. We need to take into account our customer’s expanded experience and our own place in it.

The wording in the NY Times magazine story is telling: Target was fishing for times when customers were “vulnerable to intervention by marketers” and wondered “How do you take advantage of someone’s habits without letting them know you’re studying their lives?”. If it isn’t already clear, customers don’t want to feel vulnerable or that they are being taken advantage of.

We don’t need “data scientists”, we need to know who our customers are, what they are looking for, why, how our product responds to their needs, how they find it, what they do with it; in other words we need to go back to the basics of marketing, now on the web. Business analytics and big data can indeed help, but they are only ingredients in the long term relationship we need to build with our customers.

Analytics 1.0.

Analytics 2.0.

Analytics 3.0.

Name.

Data Warehousing, Business Intelligence.

Use Big Data

Our customer's use of data.

What it does.

Gather and analyze operations data.

Vast data sets, much more powerful number crunching.

Understand how our customer uses data.

What we can use it for.

Manage operations better.

Incorporate useful info into our products.

Respond to our customer's new expectations.

We can take these steps to respond to our customer’s new expectations:

Establish a centralized way of learning about our customers, including all touch points from analytics and Big Data. This is also the first step for other projects such as CRM, customer satisfaction and the web.

Establish how our customer’s expectations are changing, and how we need to respond.

Establish who we want to be for our customers on the web, not just what info we can gain from them.

Summary: Customer satisfaction is a central pursuit for any company, and yet we have few clear tools to manage it. In this article we look at the usual suspects through the perspective of our web empowered customers. While these tools do help we urgently need to expand their scope, cut through the consultant speak and look for specific opportunities.

Questions may not cover what customer really cares about, answers might be biased.

Needs to be complemented with more questions, doesn't tell us where to improve.

Applies only to customers who have contacted customer service, not the entire universe of clients.

When we talk about customer satisfaction we usually mean surveys we ask customers to fill after a sale, which we can then aggregate and follow through time to see how we’re doing; the problem is the surveys themselves can be a nuisance for customers (for instance if they’re long); they could be giving answers devoid of meaning to get away as quickly as they can; the questions can be interpreted differently from what we meant (the customer might not have the heart to give the overall experience a bad mark for fear of harming sales staff, or on the contrary might give them poor marks for something that is beyond their control); or the questions might not make sense to them:

Customer rates his overall satisfaction 8 out of 10.

Next question in the survey: Why did you not rate us 10 / excellent?

Customer thinks to himself: “Because perfection is only the purview of the gods, so no one ever gets a 10”. We could normalize but then other customers might be willing to give it a 10.

The first lesson is that we need to adapt our customer satisfaction questions, how and when they are asked as they are themselves part of our customer’s experience: do they feel that we really care or that we are going through the motions? Does it capture the aspects they care for? Is it an additional hassle to respond?

From our customers’ perspective their experience has expanded thanks to the web, so it refers to aspects beyond the scope of the traditional satisfaction survey and the control of our sales staff. Our customers now find answers to their questions through other consumers on the web, while ignoring our advertising and marginally remembering periodic sales and promotions. When asking a question (does the color wear off quickly?) they get answers from their peers, which are not necessarily right but point to a much bigger experience through which our customer is discovering our product’s attributes, quality and value. As I have argued before, it is in our own interest not just to respond to our customer, but to lead them through this wider and deeper experience, so they can achieve an overall better result and a productive and even fun experience at every step of the way.

The second lesson is that we need to respond to these new expectations through the web, become another trusted peer in our customers’ network, and help our sales staff be in sync. With this expanded definition of our customers’ experience we then need to adapt our notion of their satisfaction.

The Net Promoter Score (NPS) introduces the concept of a much shorter survey, usually consisting of one of two questions, such as “would you recommend us?”, which seek to summarize our customer’s overall experience; it has the advantage of addressing some of the concerns with longer surveys. We can then choose to focus on our “promoters” and / or “detractors”, which seems to play well with our customer’s interaction with our product through the web, particularly the idea of our brand’s fans.

The first problem with NPS is that it doesn’t tell us where to improve, which leads us to ask more questions, which in turn takes away its advantage over normal surveys.

The second problem is that while it sounds nice to focus on our “promoters”, “detractors” are a lot more vociferous on the web, so unless we have a plan to deal with them we might find ourselves putting out many, many fires.

The third problem is that satisfied customers are not necessarily promoters, much less fans of our brand. Brands with real fans (as opposed to fake Facebook like “fans”) took years to cultivate them, and that relationship might not be as profitable as we would like it to be: while Apple is a prime example of hard core fans for their Mac PCs, their numbers were so low compared to other brands that the company almost died several times, and resurrection only came thanks to a much wider audience through iPods, iPhones and iPads, people who generally are fans of the brand if not quite as rabid as the Mac crowd.

The third lesson is that while a simple, easy to grasp indicator such as NPS can help us see which way the wind is blowing, it doesn’t tell us where to invest, and may even derail our efforts.

Customer Effort introduces an interesting concept with respect to Customer Service: instead of trying to exceed our customers’ expectations we should deal with the specific issues they struggle with and spend more effort trying to solve, quickly and efficiently. This has the advantage of letting us know where to invest to improve customer satisfaction.

The problem with the Customer Effort approach is that its power as predictor of customer loyalty only applies to post sales Customer Service, not to the customer’s entire experience: as a general rule we do want to exceed our customers’ expectations when they are looking for our product, which is a different mindset from solving post purchase problems efficiently: meeting or exceeding those expectations might indeed preclude problems from occurring in the first place.

The fourth lesson is that if we expand the concept of customer effort to the entire customer experience as seen through the web we might find something even more useful: how much effort does our customer have to spend to find out which options are best for him? What works best for his budget? Which product attributes are more important? It’s not so much a series of problems as a series of opportunities to improve our customer’s overall result, his experience at every step of the way, and his satisfaction; this would have the added advantage of letting us know precisely where to invest.

To improve our customers’ satisfaction and hence attract and retain more of them we need to understand that their expectations are changing as their experience is now wider and deeper thanks to the web; that is to say, thanks to their interaction with other consumers, through which they are discovering our product’s attributes and what is best for them; and it is through the web itself that we need to engage our customers to improve their satisfaction. The web can help us complement our sales staff’s efforts and help them be in sync with our customer’s new expectations.

Summary: As we seek a competitive advantage and to better serve our customers we come across concepts that seem nice, but might be difficult to implement or fit together: Customer Relationship Management (CRM), Knowledge Management, Customer Service. To help us cut through the jargon we can use our customer’s perspective on our product, which has been changing thanks to the web.

The subject of CRM, Knowledge Management, and Customer Service has been knowledge about our customers, we can sum up how they have been generally used:

Tool or function.

Knowledge Management.

Customer Relationship Management.

Customer Service.

Actual use.

Gather and distribute staff knowledge about customers.

Mine data to learn about customers.

Deal with customers after the purchase.

Goal.

Efficiency, sales.

Improve customer loyalty.

Solve post purchase problems, complaints, warranties.

All of these tools and functions are useful, although their actual benefits might not match their grandiose names; CRM for instance has been synonymous with loyalty programs, not actually managing entire relationships; and customer service is a euphemism for solving whatever problem the customer has after the sale.

We should also point out that these projects may imply substantial investments and their return might take some time, depending for instance on our product sales cycle (buying toothpaste is a matter of months while a refrigerator takes decades, so hanging on to that loyal customer might not be easy).

Our own customer’s knowledge about our product helps us see that their experience can be much broader and deeper than what Knowledge Management, CRM and Customer Service cover:

With a simple web search our customer can find not only the best, but how other consumers have fared in the long run, and discover the myriad components that make up not just a product but the entire experience surrounding it: What’s the best quality? Which are the essential components? Which are nice to have but we can do without? What should we avoid?

Our customer can also contribute to other consumer’s quests: whether staff is rude or courteous, warranty responses quick or not, which products have worked out better in the long run, if a price is fair…

The difference between what we know about our customers and what our customers themselves know about our product is crucial.

We could give the tools that help us deal with our customer’s perspective a new name, such as Customer Knowledge Management, but that would miss the point, which is that we need to think and act according to the much bigger customer experience that encompasses all these tools. Marketing has long identified all the parameters that make up our product’s value, but seeing it from our customer’s perspective lets us answer the hard questions:

Is our customer loyal? Can loyalty be bought with bonus points or are we confusing it with something else? Are we selling our customers and ourselves short?

Does our customer appreciate our product’s quality and attributes? Or do we need to keep enticing him with lower prices? Is our in store staff prepared for our customer’s wider questions?

Does our customer appreciate a better experience, such as faster turnaround, efficient service, and how much is he willing to pay for it?

What are the limitations of CRM, Knowledge Management, Customer Service and traditional advertising for the greater customer experience?

We can already draw several lessons:

For the first time we have the means for our customers to tell us directly what they are looking for, what they are and are not finding, as opposed to indirect means like data mining, our staff’s interpretation of what customers want, or biased surveys.

We need to see our customers’ greater experience as an opportunity for growth and innovation, to complement the efficiency and loyalty goals for Knowledge management, CRM and Customer Service. This can help us put these programs in perspective, particularly when we are in need of growth and not just internal process improvement.

We need to use the same medium our customers are employing to expand their experience: the web. This means thinking beyond our own stores or distribution channels, beyond the moment of purchase and more about everything that leads to it and everything that happens after.

To meet our customer’s new expectations in their expanded experience through the web we need to take several actions:

We need to be more proactive to engage more proactive customers. The web is the only mass medium that lets us be a direct counterpart in our customer’s conversation.

We need to give our customers the proper incentives to contribute and make them feel appreciated when they do so. We also need the right tools and incentives for our own staff to use our customer’s contributions.

We need to change our mindset to see our customers as active agents and not just as the recipients of our actions, as information partners and not merely as information sources. This might be the key to everything else and may require it’s own plan to keep it from becoming an empty slogan.

We need to expand our data mining through the web beyond what happens at the store to feed CRM and Knowledge Management systems, while keeping our customers’ privacy concerns in mind and their information safe; the opportunities of the wider customer experience go beyond merely attempting to track our customers on the web.

We also need to take into account the fact that customers might know more about the experience surrounding our product but they are not product or market experts, following them blindly might lead us to Homermobiles.

CRM, Knowledge Management and Customer Service are all useful and necessary, but their traditional uses respond to a more narrow, inward looking view of our customer’s experience, which has been expanding thanks to the web. We can use our customer’s wider experience as a focal point, to understand what each can contribute, as well as how to use the web itself to engage our customers.

In our search for a better use of the web we can fall for the usual obstacles of fancy technology, nice design or popularity; but real solutions with an impact on our bottom line need a business anchor like the one illustrated by the case of the golden converter.

Platinum “cool” fountain pen

While looking for his next fountain pen, our consumer stumbles upon the Platinum Cool, a clear or “demonstrator” fountain pen made by Platinum of Japan. While researching other consumers’ experience with this pen he forms an opinion on its performance (nib, flow, ergonomics), design, desirability and accessibility (price).

Platinum converter

He uses his pens with converters, as opposed to cartridges, but then finds a problem: the only converter Platinum apparently sells has a golden part which he intensely dislikes, and would show through the transparent pen. In the old economy, this would be the end of the story, our consumer loses interest and Platinum loses a sale.

Platinum Cool with Goulet Pens sanded converter

In the new economy our customer searches for “platinum converter silver” and lo and behold, finds an answer from a Platinum distributor (with whom TheGreatVine has no relation), in the form of a web page with a video and text which explains how the converter can be disassembled and the annoying golden bit sanded; he even mentions the material that can be used.

The result is that the brand recovers potential sales, the distributor earns the gratitude of potential customers and thus potential sales, even if the price elsewhere is lower.

The lessons from this case are:

Breadth of the experience: Our consumer’s experience begins way before he sets foot in a physical pen shop (if he ever does), and ends much later (all those who have the pen but were unhappy about the golden converter and ask related questions, all those who try the solution and say whether it works or not).

Depth of the experience: our consumer now knows that the product can be customized to his needs.

Someone from the brand or distribution channels must know enough about consumers and their tribulations, about the product, and have the right incentives to be able to offer a solution.

The web solution itself has two parts: (a) it needs to be found, in this case through the keywords consumers are using (platinum converter silver), and (b) it needs to be easy to understand (both in text and during the video), in other words we value ease of use much higher than fancy technology. The solution proposed (website and video) must also be easy and cheap to produce.

In this case the brand is out of the loop, while it should be giving its distributors the incentives to generate this type of solution.

Are web solutions about technology, about people or about money? The answer depends on who you ask but the case of Blablacar (formerly covoiturage.fr) can help us understand them better.

Carpooling sign in France (entrevoisins.org)

Carpooling allows people to share car rides and split the costs. The car owner pays less for fuel and tolls, the rider avoids other more expensive and cumbersome transportation like buses and trains. The recent SNCF (train) strike in France provided an additional incentive to use this alternative.

Carpooling has a straightforward financial element: save money; it also has social components:

Meet other people, perhaps even engage in interesting conversations, see a bit of the countryside; or endure painful silences and unsavoury characters (or worse): it is the modern, more efficient equivalent of auto stop.

Individuals organize themselves by the thousands, so that drivers can establish routes, times, number of passengers, ride price or costs, passengers can ask about luggage size, smoking and even music preferences, and they can make specific enquiries about each other and accept or refuse rides.

Less pollution is generated (for instance with less cars on the roads, each with more occupants), and some governments have attempted to reward car pooling (for instance with carpooling only lanes) for this reason and to improve traffic.

Car pooling web solutions have two possible origins:

A community of individuals which organizes itself, usually with the help of a benevolent tech savvy user; this is a service for users by users, which usually runs into specific limitations: not easy to use, doesn’t cover as many routes, doesn’t have all the options (is it easy to know if I can take my cat? Is it easy to specify that I’m allergic to cats?), there’s no easy and safe way to check the reputation of the driver (is he a maniac?) or the rider (is she a psychopath?). A core of users will think it’s perfect, but the overall numbers remain limited and there are specific costs: for instance if a rider doesn’t show up and the driver still has to make the trip, it will cost him more than he had planned for.

A company trying to offer a specific service, usually following the logic of “capture the market, charge later”; this type of company requires a financial backer that demands growth in users and can wait for a return; it has the incentive to provide a polished service that covers most of what users want, particularly if it has competition on its heels: if done right the number of users and routes will be greater, the service more efficient and potentially the costs lower, for instance if the driver is paid even if the rider doesn’t show up (with a prepaid service) – which gives the riders the incentive to keep their word. It’s important to realize that while the solution may be more refined, the main input remains the community of drivers and riders.

One fine day, a company decides that to keep offering a useful and reliable service, and / or to repay the investment, it needs to start charging its users. The reaction to blablacar when it did just this is telling:

Many users felt betrayed, for it is their community.

Others cannot understand why they have to pay for a service which they see as occurring among themselves.

Others are opposed in principle to any form of payment, which would introduce the awful stench of capitalism.

Some drivers confessed that having an assurance of being paid was better.

Many drivers and riders find that the service is useful and offers convenient routes.

There are other carpooling options, some of which will remain staunchly free.

Apart from a few cultural idiosyncrasies (commerce and marketing being the work of the devil) the case helps us see a few lessons:

There is a lot of value unlocked when individual consumers organize themselves massively: this is consumer side innovation, as opposed to production side innovation, and can be very interesting for companies looking for a competitive advantage and differentiation.

The web makes this massive organization potentially much easier and faster.

Normal consumers depend on more tech savvy individuals, but this limits the benefits and reach of the solution as techies think about technology, not about consumers.

Companies that grow from a community need to cultivate it, so that everyone understands the individual and communitarian benefits of a better service, even if some will be opposed in principle. This is not just a communication effort but also a genuine operational issue, as the company benefits from the input of each individual.

Offering a better service can be a noble goal in itself and an option to less involved, nine to five jobs.

All companies can gain from thinking of their customers as a community, in which they need to be better integrated. For instance that community can help a company see which products are in demand, which problems they face, which changes would be desirable, before the competition can.

The web is all around us, we use it daily as consumers and yet its use by our companies and organizations still leaves much to be desired. To fulfill the web’s promise we need to step back and look at its use by our customers, as opposed to the technology and design behind it, to see how we can improve our participation in it.

Our customer is looking for a set of earphones or headphones; where does this quest take him, what products does he end up with? Could he have done better? Is his path filled with uncertainty and hassle? How much does he enjoy the final product? In the old mindset, all of this is “his problem”; in the new mindset, it is a series of opportunities to compete on a better outcome and improve the experience for our customer at every step; and the web lets us meet our customer at each of these steps.

Our customer ends up with a set of earphones which don’t quite fit his ears, listening to poorly sounding music from his phone; he isn’t sure of having made the best purchase and pretty soon stops listening and leaves the earphones on a shelf, to be forgotten. In the meantime there are earphone tips which would have made them more comfortable, digital players which would have made the most of the music files, music which would have knocked his socks off; and all their vendors are missing a sale. In the old world this would be the end of the story; in the new world he will leave comments at the store’s and the brand’s websites: “Don’t bother, it’s not worth it”; and at a stroke the brand will have lost thousands of potential customers, not just this individual’s future purchases.

The lesson is that the very first step for any web project is to ask ourselves: Where do we want to take our customer? For companies with established brands, the question becomes: just how much are we really fulfilling our brand’s promise? We are talking about the breadth and depth of our customer’s experience with our product.

Following Theodore Levitt’s classic 1960 HBR article “Marketing Myopia”, the earphone brand isn’t in the earphone business, but in the “sheer pleasure from music” business, or in the “make workouts less boring with music” business; the digital camera manufacturers are in the “get that perfect shot while on holidays with the family” business or in the “help me see if this photo hobby is for me” business: the idea is old, but the web makes it all the more possible, and all the more pressing because our customer is closer to that expanded definition of our product.

The second step is to establish a way to generate insights into our customers to answer that basic question. Who has that knowledge? How can we collect it, understand it, use it? This implies a cultural shift because we can only answer these questions from our customer’s perspective instead of seeing him as the source of all our problems.

This cultural shift might be a deeper problem than you think, as we might have lavished on our product’s design, spent years perfecting the engineering behind it, countless resources on our supply chain… Only to have the wretched customer “holding it wrong“.

This second step involves another cultural shift because we cannot ask specific results from whoever is in charge of generating insights: it’s a learning process and we’ll know what to do with the insights only once we have them. Some people don’t have the temperament to work outside of an established framework, some companies aren’t structured to invest in results that aren’t applicable in the shortest of terms, some executives don’t have the time to stop and think, office politics might get in the way… But the insights are still necessary to proceed, and whoever is able to produce them will have a competitive advantage, so we need to find a way; those insights might also be a required ingredient for other projects such as CRM. The solution I suggest is to establish a “Web Lab” which builds a map of our customer’s experience and produces specific web solutions, some of which might be very simple and easy to implement.

The third step once we have those insights and establish a few web solutions, is to understand the resources required to implement them. The good news is we will have already made the biggest and most difficult investment, namely those customer insights. We will also be in a position to establish which resources are the most important, what we can do with what we have, which resources need to be cultivated internally and which need to be outsourced, and specific requirements for external suppliers.

It would help if we followed a web methodology which establishes a specific flow for our projects, from our goals and solutions as defined in a content strategy, to the information architecture, usability and programming requirements; while these may sound daunting to the uninitiated, it is much easier and quicker to implement for the respective specialists with good requirements, and a lot can be done with available and even free or very cheap technology.

As consumers the web is expanding our horizon and our expectations; if we invest in understanding our own customers’ path we can use the web to improve their experience around our product, expand our sales as well as our profit margins, and have a competitive advantage.

Customer Relationship Management is technology with a great promise that remains largely unfulfilled; understanding why and drawing parallels with our use of the web can help us use both better.

My initial feeling about CRM was that its results remained limited because of the difference between its business applications and its implementation by IT departments; this is part of the problem but the biggest one can be seen as yet another case of putting the cart before the horse: we need to first define what we mean by CRM and how we can use it, and only then look for CRM technology.

In the words of Maklan, Knox and Peppard in “Why CRM fails – and how to fix it“, we need to think of the marketing capabilities we need first, and only then look at the investment in CRM technology that can support them; it has usually been the reverse, installing the technology and then somehow hoping that our customers will appreciate the effort and reward us with more loyalty. We have been guilty of thinking of CRM as an end in itself, instead of as a tool that supports our actual relationship with customers.

The same idea applies to the web: if we don’t establish first how it affects us and how we want to use it we will fall on its defaults, be it popularity for its own sake, the latest fashion (Twitter, Instagram, Chatroulette, etc), pretty websites no one uses, or annoying our customers with ads.

To generate the marketing capabilities we need the authors in “Why CRM fails” suggest a framework based on four capabilities and three forms of marketing relationships, as illustrated in the following table (this is my interpretation):

Maklan, Knox and Peppard exemplify marketing capabilities with a company that discovered a few of its customers had an effect on many others (their “followers”), so taking them from “transactional marketing” to “one on one marketing” would have a positive effect on sales, and this is a specific goal for CRM which requires a specific investment.

The approach I suggest for the web complements this framework by looking for specific customer insights according to the biggest opportunities to improve our customer’s experience with our product, as part of their “quest”, first in general according to our brand’s promise, and then at each step, from when they look for our product, to when they purchase it, to when they use it.

As with the marketing capabilities framework there is no magic bullet, we need to generate these customer insights ourselves, they can help us establish specific opportunities and solutions on the web, as well as specific CRM opportunities and the tools we need to support them; we cannot ask our web vendors or our CRM vendors to generate them for us, even when they follow “best practices”.

The ability to learn and experiment to generate these insights will surely be a clear competitive advantage. The good news is this investment in customer insights now has at least two forms of payoff, on the web and with CRM.